Good morning! Here are 10 of the biggest stories you should hear about before markets open in the US.
Russia Is Heading Into Recession. Deputy Economy Minister Alexei Vedev has warned that Russia is likely to enter its first recession since 2009. The Economy Ministry downgraded its forecast for 2015 growth to -0.8% from +1.2%. This comes amid crashing oil prices, a tumbling ruble, and punishing economic sanctions from western trading partners.
Russia Abandons A Major Pipeline Project. “Russia’s $US40 billion South Stream gas pipeline project has fallen victim to plunging energy prices, stalling European demand and the political standoff between the European Union and Moscow over the crisis in Ukraine,” Reuters’ Henning Gloystein and Dmitry Zhdannikov reported. “Russia on Monday said it had scrapped the project to supply gas to Europe without crossing Ukraine, citing EU objections, and named Turkey as its preferred partner.”
Eurozone Producer Prices Tumble. Crashing oil prices are manifesting in Europe’s inflation data. “Eurozone factory prices fell at their sharpest monthly rate in a year in October as the cost of energy and non-durable goods such as food dropped sharply, putting pressure on the European Central Bank to do more to lift the bloc’s depressed economy,” Reuters’ Philip Blenkinsop reported. “Prices at factory gates in the 18 countries sharing the single currency declined by 0.4% from September.”
S&P Joined Moody’s In Criticism Of Japan’s Public Finances. Standard & Poor’s cast doubt on the ability of Japan Prime Minister Shinzo Abe to repair the country’s tattered finances, a day after Moody’s tarnished the government’s economic record less than two weeks away from a major election.
And Japanese Workers’ Wages Came In Below Inflation For The 16th Month. Wages rose by only 0.5% in the year to October, well below inflation, even after stripping out the effect of April’s sales tax increase.
It’s Merger Tuesday. “British insurer Aviva agreed terms for a 5.6 billion pounds ($US8.8 billion) takeover of rival Friends Life in all share deal which creates a market leader with 16 million life insurance customers,” Reuters’ Huw Jones and Carolyn Cohn reported. “Aviva said the merged company is expected to generate 600 million pounds in excess cash flow a year and about 225 million pounds in annual cost savings by the end of 2017.”
Markets Aren’t Doing Much. US futures are in the green with Dow futures up 28 points and S&P 500 futures up 2 points. Europe is mixed with Britain’s FTSE 100 up 1.0%, France’s CAC 40 up 0.1%, and Germany’s DAX down 0.2%. Japan’s Nikkei closed up 0.42%, and Hong Kong’s Hang Seng closed up 1.2%.
Cyber Monday Was Good. Online sales on Monday jumped 8.7% year-over-year according to data from IBM Digital Analytics. Mobile sales surged 29.3%. “This trend may indicate that shoppers are becoming more comfortable and digitally savvy in how they use online coupons and rebates to secure the best bargains,” according to IBM. The average transaction price was flat at $US133.07. It’s worth noting that analysts were forecasting 13%-15% growth in online sales, so these stats are arguably disappointing.
Another GM Recall. “
General Motors Co will recall 316,357 SUVs and sedans, mainly in North America, because the low-beam headlights can stop working, the company said on Monday,” Reuters’ Bernie Woodall reported. “
Affected vehicles are the model years 2006-2009 Buick LaCrosse sedans; 2006-2007 Chevrolet Trailblazer, GMC Envoy and Buick Rainier SUVs; and 2006-2008 Saab 9-7X and Isuzu Ascender SUVs.”
Get Ready For Auto Sales… The big automakers will release their November US sales stats. Analysts estimate the pace of vehicle sales increased to an annualized rate of 16.55 million units in November, up from 16.35 million in October. “Autos haven’t typically been a focus of Black Friday, but last year the industry made a push to get in on the holiday sales frenzy to good results, and there’s an effort underway again this year to get more people into dealerships after Thanksgiving,” Morgan Stanley’s Ted Wieseman noted. “So we’re looking for some more upside to potentially reach 17 million for only the second time in the past eight years.”
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